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WSJ: How to Become a Financially Compatible Couple

WSJ: How to Become a Financially Compatible Couple

With Valentine's Day around the corner, we thought it would be appropriate to touch on one of the toughest topics affecting relationships today - money. 

A Wall Street Journal article published today and written by Manisha Thakor titled "How to Become a Financially Compatible Couple" provides some great insight into the problems couples face when merging their finances. She says that, "Study after study shows money right up there with general incompatibility and infidelity as top marriage busters." Ouch! 

Here at Ivy League, we specialize in providing fee-only financial planning and investment management for couples, and we make sure that each party is educated as to their financial situation. 

Read the full article below or click through to WSJ to read it on their site. 

Contact us today to set up an initial consultation to learn more about financial planning for couples, investment management for couples, or for general financial planning concerns. Happy Valentine's Day!

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MANISHA THAKOR: When it comes to getting married, we have no statutory requirement or social convention that couples be required address an issue which, if left unexplored, can do deep and permanent damage to the well-being of a relationship.

And make no mistake, money damages marriages on quite a regular basis. Study after study shows money right up there with general incompatibility and infidelity as top marriage busters.

To add insult to injury, academic research has demonstrated that we are biologically hardwired to be romantically attracted to our financial opposites. It turns out there is something intoxicating about “financial otherness” in the early stages of a relationship. In other words, we tend to be attracted to the very type of person most likely to stress us out financially down the road.

So now fast-forward a bit. Many people are married in ceremonies during which they pledge to support each other “for richer or for poorer.” But in the absence of clarity about how your household will handle money during what is hopefully a fulfilling and life-long union, it’s easy for those words to become meaningless.

But what if, as a part of obtaining a marriage license, couples were given the option to watch an online financial-education video in the privacy of their own homes? This video could walk them through some of the key financial topics that come up in a marriage and couples need to discuss honestly with each other. Not only could this exercise heighten general financial awareness, but it could go a long way toward bringing couples even closer together by removing the tension that inevitably permeates a relationship when such a vital topic goes under-discussed.

Examples of the discussion points I’d love to see presented in this kind of video include:

  • Where are we starting from?
    • What assets, liabilities, income and existing ongoing expenses are each of us bringing into this marriage? If we have large debts (student loans, credit cards, business-related) what is the plan to pay them off? What investment accounts do we have and how are they invested?
    • What are each of our credits scores? If either of us have blemishes on our credit, what caused them and what changes have been made to prevent such occurrences in the future?
    • What are the non-negotiable financial commitments in each of our lives?
  • Where do we want to go?
    • Housing: Rent or own? How much, and in what part of the country?
    • Children: Do we want them, and if so, how many? Are we ready for any necessary financial trade-offs?
    • Education: Public or private? Who will pay for what?
    • Travel and fun: What kinds of activities and what kind of budget?
    • Philanthropic giving: What causes and in what amounts?
  • What are the action steps to get us from here to there?
    • If we merge all finances, do we want to set a dollar limit above which we agree to consult each other before spending? Or do we set an amount we allow each other to spend monthly, no questions asked?
    • Do we need to increase income or rein in spending to reach savings goals?
    • Do we need to dial up or dial down the risk in our investment portfolios? Are we seeking guidance from a fiduciary adviser who must legally put our interests first?
    • How often, and in what way (on our own or with an adviser’s help), do we want to periodically revisit these questions?

The intention of this list, which is not exhaustive, is simply to demonstrate the range of topics that, when properly addressed, can help a couple launch their marriage from a more intimate place financially. Including this discussion as one of the many steps that go into the joy-filled process of planning a wedding would position many more couples to effectively solve the kind of financial problems that all too commonly destroy a marriage.

Manisha Thakor (@ManishaThakor) is director of wealth strategies for women at Buckingham and The BAM Alliance, a community of independent registered investment advisers.

 

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Staying the Course Amidst the Market's Volatility

Staying the Course Amidst the Market's Volatility

Many of you are familiar with Jack Bogle, founder of Vanguard. Bogle was a pioneer in the investment community, being the driving force behind low-cost index fund products.  Even well into his 80’s he is revered for his perspective on the market and the investment environment in general. 

 Bogle was interviewed on CNBC on Tuesday, December 16th and his main message was the following:

  • Get used to the market's volatility
  • Have a plan to stay the course 
  • Use asset allocation to help you meet your financial objectives

We have been practicing this form of long term investing ever since our inception in 1999, and are continually reminding our clients that staying in the market for the long term with an appropriate asset allocation strategy is the most prudent investment strategy. While we don’t agree with all of Bogle’s points, such as not investing directly overseas (where the markets are much less expensive than the U.S.), his voice adds a sensible viewpoint amidst the recent market volatility.

To watch the interview in its entirety, please click here. As always, if you have any questions about long term investing, market volatility or anything else investment management related, please don’t hesitate to contact us to schedule a complimentary consultation. 

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